Professor’s Comments July 15, 2016

Posted by OMS  at July 15th, 2016

The Dow had another strong rally, rising 134 points to close at 18,506. Volume was moderate, coming in at 94 percent of its 10-day average.  There were 239 new highs and only one new low.

So far the rally off the 27 June low has consisted of three waves, with the middle wave being the ‘Blade’ of a small Hockey Stick pattern. The ‘Stick portion of the pattern or wave ‘a’ produced a move of 886 Dow points.  To date, the rally off the ‘Blade’ low to yesterday’s high was 824 points.  So based on the pattern, the Dow should be getting very close to hitting its target.  We could be within days of a major top.

One of the things I found interesting when I looked at the charts yesterday was the performance of The Tide and the VTI.  Since The Tide turned positive on 30 June, the Dow is up 576 points as of last night’s close.  On the other hand, when I looked at the VTI, it turned positive on 29 June, one day before The Tide turned positive. And as a result, it identified a move of 812 Dow points as of last night’s close. Contrast this with the performance of the slower DMI, which finally turned positive on 8 July. It only identified a move of 359 Dow points.

The reason The Tide and VTI are quicker to respond is because of the way the indicators are constructed. The Tide uses four individual breadth indicators. Breadth tends to lead price, so it usually identifies a move several days before prices start to change. The DMI is based on price movement and as a result tends to be slower. However the VTI doesn’t suffer from these constraints. It is built to be a much faster indicator. As a result, it turned positive almost immediately and has remained positive throughout the rally. 

I have not had a chance to do a full five-year comparison between the VTI and The Tide, but it appears that both indicators either turn on the same day or within a day of each other. This could be very useful in the future, because it could allow students to step into trading positions.

For example, when the VTI turns, a student could establish a small position in a stock from the Honor Roll.  Then when The Tide turns, the student could start looking for ETFs to trade from the Dean’s List.

The reason I’m mentioning this today is because you now have two great directional indicators, besides the DMI, to help you establish trading positions.  Then when all of the indicators confirm each other, it should help increase your confidence level.

So with the markets looking like they are approaching a major top, I’ll be watching for the VTI and The Tide to change direction.  When they do I’ll start trading the shorts being highlighted on the Honor Roll and inverse index ETFs from the Dean’s List.

That’s what I’m doing,

h

Market Signals for

07-15-2016

One hour video recorded from May 28, 2016 The Professor’s Signs of a Major Market Turn – Prospectives and the Projected Timing and Levels One hour streaming video – includes webinar handouts The Professor usually holds an update class whenever the Market looks like it may be making a major turn. If you have been following the Professor’s Comments you know that a turn is due….. LEARN MORE

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
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All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.